NGFA urges STB to reject petition for railroad exemption

The National Grain and Feed Association (NGFA) has urged the Surface Transportation Board (STB) to reject a petition from rail carriers urging that they be exempted from the statutory requirement to file agricultural transportation contract summaries.

In a petition to the STB filed May 12 by Norfolk Southern Railway Company (NS) and CSX Transportation Inc. (CSXT), the two carriers asked the agency to initiate a rulemaking to eliminate the current requirement to submit a summary of each contract for the transportation of "agricultural products...and products (derived) therefrom."

In response, the NGFA submitted a statement urging the STB to deny the petition, asserting that having access to such agricultural transportation contract summaries enhances transparency and constitutes a meaningful protection to shippers against the abuse of market power by railroads. Further, the NGFA said, the importance of having access to rail agricultural transportation contract summaries has been magnified by the severe and widespread rail service disruptions dating to late last summer, which have raised questions as to rail carriers' ability to meet their contract and common-carrier obligations to agricultural shippers.

"It is clear that, despite the railroads' best efforts, the current service and capacity issues will take some time to resolve," the NGFA said. "The need for the information and transparency on railroad agricultural commodity contracting practices...is at least as great, if not greater, than in the past."

In addition, the NGFA stated that while recent trends have been toward the use of tariff rates, an estimated 20 to 25 percent of grain and oilseed traffic still moves under rail contract rates and that the use of contracts may become more prevalent given "existing rail service deficiencies and the prospects that capacity challenges likely will persist for the foreseeable future as demand for energy, agricultural and other sectors for rail service continue to increase."

The NGFA also contested claims by the NS and CSXT that preparing agricultural contract summaries represent an undue burden on the carriers. NGFA noted NS estimated it spends only about six hours per week preparing agricultural contract summaries - the same as reported in 2010 and 2011 - and that two-thirds of that time is attributable to the carrier's own choice of using a form that requires more manual effort. For its part, CSXT made no specific or quantified estimates, "vaguely" alleging only that it had "spent considerable time and expense" developing data systems and incurred "substantial information technology maintenance costs and employees' time to administer and maintain the compliance system."

Further, the NGFA noted that the petition seeks to exempt all railroads, but contains "no assertions or claims" from other carriers as to whether they believe they are "unduly burdened" by complying with the requirement to file agricultural contract summaries.

"Given the current state of the rail industry, the (STB) should err on the side of increasing transparency and retaining statutory protections for rail shippers," the NGFA concluded. "This is particularly true where, as in this instance, the burden on railroads to comply with their statutory and regulatory obligations is minimal."